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Nand Kishore vs Suraj Mal And Ors.

High Court Of Judicature at Allahabad|26 April, 1915


JUDGMENT Piggott, J.
1. In this case an appellate order by the District Judge of Cawnpore has been called up by this Court in the exercise of the general powers of superintendence and revision conferred upon it by Section 46, Clause (1), of the Provincial Insolvency Act, III of 1907. The order is one sentencing an insolvent named Nand Kishore to undergo simple imprisonment for a period of six months under Section 43 of the said Act. The allegations held to be proved against him are:
2. (1) That in the year 1908 at a time when the business which he was conducting was beginning to fail, he fraudulently transferred certain property by way of gift to his wife and other members of his family, (2) that in the schedule of assets submitted by him along with his application to be declared an insolvent he fraudulently concealed the existence of the property nominally transferred by him and also the fact that he was the owner of a shop in what is known as the Kuli Bazar at Cawnpore. Nand Kishore's case was that the transfer by way of gift was made in good faith, and that the shop in the Kuli Bazar has never been his property. The finding against Nand Kishore, both in the Court of first instance and in the District Court, has been mainly based upon certain reports submitted by the Receiver. I hold that those reports do not constitute legal evidence for the purpose for which they have been used and should not have been taken into account against Nand Kishore. The learned District Judge has referred to the decision of a Full Bench of this Court, in a case reported under the heading Chiranji Lal v. Emperor 25 Ind. Cas. 986 : 36 A. 576 : 12 A.L.J. 1105 : 15 Cr. L.J. 658. Somewhat more in point was the earlier decision of a Bench of this Court in Nathumal v. District Judge, of Benares 6 Ind. Cas. 807 : 32 A. 547 : 7 A.L.J. 602. Neither of these precisely touch the question which has been argued before me, but there can be no doubt that an order sentencing an insolvent to undergo imprisonment must be based upon legal evidence and the depositions of witnesses whom he had an opportunity of cross-examining. The report of a Receiver may be evidence for the special purpose of determining whether an insolvent is or is not entitled to an order of discharge, vide Section 44 of the Act. It may also be taken into consideration by a Court for certain other purposes, as for instance when considering the admissibility of a proposal for composition under Section 27 of the same Act. It is not evidence for the purpose of all possible proceedings under the Act. I have examined the facts of the present case, and I am quite satisfied that there are a number of points on which the Receiver might well have been corss-exaniined, and on which Nand Kishore was fully entitled to an opportunity of corss-examining, before the statements of fact embodied in his report could be accepted and acted upon as they have been done in the Courts below. I do not gather from the record that either the property purporting to be transferred under the deed of gift of 1908 or the shop in the Kuli Bazar has been taken possession of by the Receiver as part of the assets of the insolvent, or made available for the satisfection of the creditors. The learned Judge of the Small Cause Court who heard this case in the first instance would not, I am confident, have dispossessed any person whom he found in possession of this shop on the strength of the evidence which, in his opinion, justified the infliction upon Nand Kishore of a sentence of imprisonment. Yet it is a more serious matter to sentence a man to undergo imprisonment than to deprive another of his possession over a building. In the argument addressed to me in support of the order of the District Judge, reference was made to an English case Campbell, Ex-parte, Wallace, In re (1985) 15 Q.B.D. 218 : 54 L.J.Q.B. 382 : 53 L.T. 208 : 2 Morrell, 167. That case really bears out the view which I take of the present case. Certain reports submitted by a Receiver-were allowed to be taken into consideration in that case precisely as they could have been under Section 27 of the Provincial Insolvency Act, III of 1907. But the case is no authority for the proposition that such reports could have been treated as evidence in a proceeding the object of which was to subject an insolvent to the penal provisions of the Insolvency Act. I am unable to sustain the order of the District Court in this matter, and the only question that I have to consider is what order I should substitute for it. On a review of the entire facts of the case, I am not prepared to direct that further proceedings should be taken in this matter. I have already affirmed an order of the Court below refusing Nand Kishore his discharge, and it is possible that proceedings involving further inquiry into the matters litigated in connection with the order now before me may yet have to be taken. If it be found hereafter that evidence is forthcoming such as to justify the Insolvency Court in taking possession either of the shop in the Kuli Bazar or of the property purporting to be dealt with by the deed of gift of 1908, as assests belonging to Nand Kishore at the time when he was declared insolvent, and, therefore, available for the satisfaction of his creditors, it may be that the question of subjecting Nand Kishore to punishment for his dealings in this connection may require further consideration. Unless and until something of the sort occurs, I am not of opinion that the facts which were before the Courts below were such as to justify the application of Section 43 of the Provincial Insolvency Act in this case. My order is that the order of the Court below is set aside and that the security which I understand Nand Kishore has furnished for his attendance, if required, is hereby discharged. I make no order as to costs.
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Nand Kishore vs Suraj Mal And Ors.


High Court Of Judicature at Allahabad

26 April, 1915
  • Piggott